Debt Ceiling Impact

[dreamer17555]

If this is too political happy to delete but without getting into finger pointing on what side is right\wrong etc is anyone else starting to brace for potential impact if the debt ceiling is exceeded?

I was looking to book a November DCL cruise for my 40th but right now that is on hold as a few family members are heavily reliant on social security and those checks are in jeopardy. Another family member works for the government and honestly has no idea what will happen one way or another in regards to work. Of course we will help if need be so right now all extra expenditures are on hold.

Anyone else concerned?

 

[jalapeno_pretzel]

Yes, somewhat concerned this will spark recession. Not too extremely worried about our own financial situation, but definitely worried for others. I think there are some politicians that think a recession might benefit them. I think it's super hypocritical to raise the debt ceiling with no conditions when one's own party is in charge, but then when the other side has power, turn around and make all kinds of demands. The approach should be consistent regardless of who holds power in which branch of government.

 

[thanxfornoticin]

This has been a threat and a problem for decades, and no one's fixed the perpetual problem yet. History tells us the politicians will end up with some sort of compromise to raise and extend, claim some sort of political victory, and kick the problem down the line for another few months to avoid fixing the actual problem. We haven't avoided planning because of this issue in the past, and won't now.

 

[Christine]

As a federal worker who has been through so many things, I'm not worried too much. We did get some information this weekend about how to act at a certain point. One upside is that this is happening as we enter the 4th quarter of the fiscal year and funds have generally been released to keep the government operating until 30 September so there won't be a "stop work" for most employees.

I think the whole "debt ceiling" thing is just stupid. The debt ceiling should match the approved authorizations and obligations. Period. There should never be a limit on "paying the bills" on previously authorized funding. Honestly, it's yet another tool for political gamesmanship.

 

[BlueStarryHat]

I'm on SSI, and if my check doesn't come or is delayed I will have a problem paying my bills on time. It's my only income. My aunt is also worried about her social security. Maybe there is nothing to worry about, but my anxiety is through the roof. I wish that the people in charge, with their 'negotiations,' people who absolutely DON'T depend on these checks for their survival, would stop for a minute and consider those of us who need them. Instead they play one-upmanship games with each other.

 

[_19disnA]

It's always the same sort of postering/bluffing/showmanship on both sides and much ado about nothing. Then suddenly at the 11th hour, they will magically find a solution with each side claiming victory. Not anything to lose sleep over.

 

[dreamer17555]

I really want to hope that there will be an 11th hour agreement like in 2011 but the parties feel so far apart and there are even some fractures within each party that could cause issues. I am not sure even if an agreement is made that when votes come down that they will work out.

 

[Christine]

For those with SS income worries--I know it's hard but please try to not worry about it. Social Security is a much loved and needed benefit by a HUGE population. Any political party that plays games and causes that to lapse is committing political suicide. These people only care about themselves, their images, and the points they can score. I am fully confident they won't let this happen as they will alienate too many people. I know, I know, there's always a first time but not likely.

 

[dioxide45]

I always thought since SS is a separate trust fund, payments from it are guaranteed as it isn't subject to annual government appropriations. "Technically" there is still money in social security to send to claimants. ANyone saying that one side or the other is trying to take away SS is simply lying.

I am not necessarily concerned about reaching the debt limit or any type of government shutdown. Though I don't work in government. I know some people may need to furlough which can impact them. That said, I think our overall system is very bloated with so much spending and government waste. Over half of government agencies could probably be shut down and have zero impact on 95% of the population. The political issue is that one side likes to tax and spend and the other side would like to cut tax and reduce spending. Both result in a deficit year over year. Then there are the opinion pieces that argue against one side while completely ignoring that what the other side wants to do is just as bad if not worse.

 

[barkley]

I'm on SSI, and if my check doesn't come or is delayed I will have a problem paying my bills on time. It's my only income. My aunt is also worried about her social security. Maybe there is nothing to worry about, but my anxiety is through the roof. I wish that the people in charge, with their 'negotiations,' people who absolutely DON'T depend on these checks for their survival, would stop for a minute and consider those of us who need them. Instead they play one-upmanship games with each other.

hope this will provide you some reduced stress-

A decades-old law could protect Social Security even if the U.S. debt ceiling isn't raised in time to avoid a default, according to a recent report.

The Social Security "escape clause" from the debt limit enacted by Congress in 1996 allows the Treasury Department to draw down Social Security trust funds to pay the benefits. It prohibits the disinvestment of the Social Security trust funds for any purpose other than the payment of benefits, according to a Concord Coalition report authored by its Chief Economist, Steve Robinson.

In other words, the trust funds can only be used to issue Social Security benefits and not to pay the U.S. government's other outstanding bills.

 

[BlueStarryHat]

hope this will provide you some reduced stress-

A decades-old law could protect Social Security even if the U.S. debt ceiling isn't raised in time to avoid a default, according to a recent report.

The Social Security "escape clause" from the debt limit enacted by Congress in 1996 allows the Treasury Department to draw down Social Security trust funds to pay the benefits. It prohibits the disinvestment of the Social Security trust funds for any purpose other than the payment of benefits, according to a Concord Coalition report authored by its Chief Economist, Steve Robinson.

In other words, the trust funds can only be used to issue Social Security benefits and not to pay the U.S. government's other outstanding bills.

I wasn't aware of this law. I hope this is what happens if there's a default, God forbid.

 

[CBMom01]

As a federal worker who has been through so many things, I'm not worried too much. We did get some information this weekend about how to act at a certain point. One upside is that this is happening as we enter the 4th quarter of the fiscal year and funds have generally been released to keep the government operating until 30 September so there won't be a "stop work" for most employees.

I think the whole "debt ceiling" thing is just stupid. The debt ceiling should match the approved authorizations and obligations. Period. There should never be a limit on "paying the bills" on previously authorized funding. Honestly, it's yet another tool for political gamesmanship.

Amen. It’s a shame that too few people understand this.

 

[CBMom01]

The real tragedy of this idiotic debate is that the world sees that we’re morons and the value of the dollar keeps being eroded. So inflation is made worse by it

 

[DLgal]

It's always the same sort of postering/bluffing/showmanship on both sides and much ado about nothing. Then suddenly at the 11th hour, they will magically find a solution with each side claiming victory. Not anything to lose sleep over.

This is exactly right. It's a game of chicken, but both sides are chickens. They will figure it out at the last minute.

 

[dioxide45]

In other words, the trust funds can only be used to issue Social Security benefits and not to pay the U.S. government's other outstanding bills.

But it's all just a shell game. THere really isn't a trust fund of cash sitting somewhere or some amount of money invested in anything of external value like corporate stocks of bonds. The value of the trust fund is 100% dependant on the full faith of the US government as the trust fund is invested in US Securities such as government bonds or T-Bills. So the money has been lent out to be spend on other obligations. As long as the government can continue to pay those US bonds back to the trust fund, then all is okay. At least as far as the shell game goes.

 

[hopemax]

My concern is that everyone is expecting an 11th hour deal, that few are prepared for the case in which it doesn't come. We haven't been operating under normal political norms for awhile now, so why should we expect this to resolve as it usually has done? The disruptors don't care if they break the world; it's the goal. One of these days they will succeed, because everyone is so sure they won't or if they did, it wouldn't really make things worse anyway.

 

[dioxide45]

This is exactly right. It's a game of chicken, but both sides are chickens. They will figure it out at the last minute.

They will just kick the can down the road a little, or maybe a lot, but the problem will never be solved. The debt ceiling is a good political tool to always have. Someone of course has that tool over consumers with a credit limit on a credit card or line of credit. To say the limit should be to cover all expenditures isn't necessarily a good one. The only thing that has probably kept the government debt where it is today is with the debt ceiling. If it wasn't there, I couldn't imagine where the government debt would be right now. One side always wants to raise it without question and the other always wants to keep it the same. In the end, spending can only go so far. As a country we like to have things, and spending is what politicians do best when they are spending other people's money. The bill will come due at some point, when and what brings us to that point is anyone's guess.

 

[Kestryl]

I don’t think there is going to be an 11th hour solution.

I’m worried as a contractor. We’ll be good for a few months, but after that… the stuff I work with has implications on medical treatments (and a boatload of other things, but this is the piece that would affect people more directly). Stuff you can’t just get anywhere else. It’ll be catastrophic if we go down.

 

[barkley]

we've seen this situation play out time and time again be it at the federal or state level. it was interesting to me how little my civil service co-workers knew about their own jobs and how the funding was sourced until one of these situations came up. never failed that someone would have a 'no worries-doesn't impact me, i don't work for the feds' until one of us pointed out that our pay was directly funded through federal dollars. i have a friend whose dh was highway patrol and their practice was to always bank any overtime he received throughout the year b/c it never failed that they state they lived in would have some argument over the budget and the essential employees would be required to work for upwards of some significant period of time before they received retroactive pay.

 

[dreamer17555]

My concern is that everyone is expecting an 11th hour deal, that few are prepared for the case in which it doesn't come. We haven't been operating under normal political norms for awhile now, so why should we expect this to resolve as it usually has done? The disruptors don't care if they break the world; it's the goal. One of these days they will succeed, because everyone is so sure they won't or if they did, it wouldn't really make things worse anyway.

I completely agree with this. This is not a normal political climate. We don’t actually know what would happen if we exceed the debt ceiling, because it’s never actually happened so there is a lot of speculation as of now on if social security is protected or not.

And I definitely think there are people who want to see chaos. Or, would rather face potential chaos, than back down on anything and be seen compromising. Some see bipartisan compromise as a negative thing sadly.